With the advent of Wireless Application Protocol (WAP) browsing nearly 15 years ago, mobile carriers required some means of monetizing their newly developed data network. Given the previous success of metering for voice and text, it was not difficult for the carrier’s business teams to simply assume the same metered model for data. The data plan was born.
However, in the intervening 15 years the consumer’s appreciation has decidedly shifted from data access to a new model where content reigns, threaded and amplified through social, communications, and entertainment networks. Despite the consumer’s shift to a content-centric world, the carrier business model hasn’t evolved and remains stubbornly metered by the archaic notion of data plans. Consumers don’t understand or value the data plan, a confusing accounting of megabytes used. As a result, consumers are mismatched between what they purchase (the data plan) and what they experience (content). Even worse for a healthy ecosystem, the data plan leads to bad consumer behaviors that are at odds with the goals of application developers, content owners, sponsors, and advertisers. Consumers are hesitant to use their mobile device for fear of expensive overage charges, shut-down, or network throttling. Imagine paying a flat rate in advance for a fixed amount of megawatts of power, or cubic feet of water, or calories of food—not for what you used but what you could use. Uncertainty about data has also led consumers to consistently underuse what they’ve paid for in their data plans: a windfall to carriers, but unhealthy economics for consumers.
Does anyone really think that the future model for content consumption in the car, on an 5G watch, or even on a tablet will be based on data plans? Data metering has not been the direction of other content delivery networks outside of the mobile industry. The modern access currency is not data, but content—bundles of programming, pay-per-view, ad-based content delivery, etc. These business models have proven to be successful for network owners, content providers, and consumers alike.
Sadly, the motivation to adopt these new models will come from the commodization of data, just as voice and text were previously commoditized. ARPUs will wither and there will be pressure to grow margins. Carriers have rationalized the demise of data plans by arguing that quality of service (QoS) and network coverage will provide them the competitive differentiation to go on selling data plans. But the game has moved from commodity network to high value content. Consumers don’t value data: that’s much too abstract and they’re burdened by paying for something they don’t use. They do, however, value content.
The move to a content-centric model for the mobile industry will require a mindset shift from network operations to content programming. Carriers that are late to enact this transition will lose or be acquired. The signs of change are already apparent. Some carriers are toe-dipping with alternative access models (T-Mobile’s On-Binge and Music Freedom services, AT&T’s Sponsored Data and Data Perks programs, etc.). The recent consolidation of network operators and content providers should also accelerate migration from bits and bytes as the access currency to content services. It’s the beginning of a new beginning.